What must the liability insurance for a Cream franchise cover?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
During the Term, you must maintain in force at your sole expense the types and amounts of insurance that we require and that comply with the terms of your Lease. We reserve the right to require that you obtain all or a portion of your insurance policies from a designated supplier and on the terms and according to the specifications we approve. The liability insurance must cover claims for bodily and personal injury, death, and property damage caused by or occurring in connection with your Shop's operation or activities of your personnel in the course of their employment. All of these policies must contain the minimum coverage we prescribe from time to time and must have deductibles not to exceed the amounts we specify. We may periodically increase the amounts of coverage required under these insurance policies and/or require different or additional insurance coverages (including reasonable excess liability insurance) at any time. These insurance policies must be purchased from licensed insurers having a rating of "A/VIII" or higher by the then-current edition of Best Insurance Reports published by A.M. Best Company (or other similar publication or criteria we designate).
Each insurance policy for liability coverage must name us and any of our affiliates or other designees that we specify as additional named insureds, using a form of endorsement that we have approved, and provide for 30 days' prior written notice to us of a policy's material modification, cancellation, or expiration. Each insurance policy must contain a waiver of all subrogation rights against us and any of our affiliates or other designees that we specify. You must routinely furnish to us copies of your Certificates of Insurance or other evidence of your maintaining this insurance coverage and paying premiums. If you fail or refuse to obtain and maintain the insurance we specify, in addition to our other remedies including termination, we may (but are not required to) obtain such insurance for you and your Shop on your behalf, in which event you agree to cooperate with us and reimburse us on demand for 120% of the costs of all premiums.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, franchisees must maintain liability insurance that covers claims for bodily and personal injury, death, and property damage. This coverage must be related to the operation of the Cream shop or the activities of its personnel during their employment.
The specific minimum coverage amounts are determined and prescribed by Cream and may change over time. Cream also specifies the maximum deductible amounts for these policies. Cream retains the right to increase coverage amounts or require different or additional insurance coverages, including excess liability insurance, at any time.
Cream also mandates that insurance policies be purchased from licensed insurers with a rating of "A/VIII" or higher by A.M. Best Company or a similar designated publication. Additionally, Cream and its affiliates must be named as additional insureds on the liability coverage policies, with a 30-day prior written notice required for any material modification, cancellation, or expiration of the policy. The policies must also include a waiver of subrogation rights against Cream and its affiliates. Franchisees must provide Cream with copies of their Certificates of Insurance or other proof of coverage and premium payments.
If a franchisee fails to maintain the required insurance, Cream has the option to obtain insurance on behalf of the franchisee and the shop. In such cases, the franchisee must cooperate and reimburse Cream for 120% of the premium costs. However, Cream states that the minimum insurance coverage requirements are not representations or warranties that such coverage is sufficient for the shop's operations and that it is the franchisee's sole responsibility to obtain adequate insurance coverage based on their own investigation.